Is there a minimum contract size?

Recently at dinner with Amy Germuth and Sally Bond, our conversation turned to contract size. What is a small contract, we wondered. Is there a minimum size? What are the pros and cons of small projects?

For Sal, small contracts run between $10,000-$20,000. Her goal is to have a mix of 1-2 small projects, and 3 or more medium to large ones. On the other hand, Amy says she sometimes enjoys working on very small contracts in the $4,000-$6,000 range. They allow her to work with special populations such as church congregations who are resource poor and unable to hire her at her regular rate.

There are several reasons why small contracts are appealing. You can:

  • Diversify your client base at relatively low risk.
  • Gain experience in a new area to broaden your portfolio.
  • Prove yourself to a new client so that you can get larger contracts later.
  • Fill scheduling gaps between larger projects.
  • Enhance workflow balance.
  • Feel good about helping others.
  • Have fun and learn something new.
Sal said she has an upper limit of managing 8 projects at once. Melanie Hwalek pointed out that people are more productive when they don’t have to jump from one project to another so the number of projects may vary according to your tolerance for multitasking.

There are other realities to consider:

Scope. Knowing how quickly scope creep can happen in any project, small projects take extra vigilance. Think small. Contract for just a piece of a larger project or sequence tasks in separate contracts. This is a particularly good strategy at year end (one project in one year, the other in the next).

Project Management. Some activities are essential no matter the contract size. Plan at least 10-15% of your billable time for:
  • Contract management (and, yes, you need a contract!)
  • Client communications
  • Scheduling
  • Staff and/or volunteer management
  • Invoicing
  • Reporting
Quality. There is no such thing as quick and dirty, the death knell of any project. Think about the ramifications of task assignment. Balance the work you may hand off to the client’s staff or volunteers with the extra supervision, training, and trouble shooting that will be required to get the job done right. Your reputation is at stake, so think it through.

In the end, a small contract may be just what you are looking for. But remember, both you and the client should leave smiling—or don’t do it at all!

Gail Vallance Barrington


Thanks to colleagues Amy Germuth, President, EvalWorks LLC, and Sally Bond, President & Senior Consultant, The Program Evaluation Group, LLC, for their permission to replay this interesting conversation, and to Melanie Hwalek, CEO, SPEC Associates, for adding her two cents!

Originally published in the Independent Consulting TIG Newsletter, Volume 7, Issue 7. September 2017.

REFERENCES

Barrington, G. V. (2012). Consulting Start-up & Management: A Guide for Evaluators & Applied Researchers. Los Angeles: SAGE.

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